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tv   First Business  KICU  February 22, 2013 4:00am-4:30am PST

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the fix is in. how boeing plans to get dreamliners ready for take off. in today's cover story, what a slew of cyber attacks on the u.s. means for americans and the web. plus, a look at the books. are wal-mart's numbers signaling trouble ahead? and, trading strategies in gold, coca-cola and herbalife from our team of traders. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's friday, february 22nd. i'm angela miles. in today's first look: selling continues in the market. stocks and commodities fell yesterday on distressing economic news, including a rise in unemployment claims. but it was the vix that made the day's biggest headline. the gauge of
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anxiety in the market jumped the most since 2011 this week. investors are becoming concerned about the march 1st deadline for sequestration even though traders tell us a deal is likely to happen. earnings after the close came in from hewlett packard. aig turned in a loss due to superstorm sandy. hpq shares shot up 6% last night on better-than-expected news. and today, the midwest is digging out from winter weather as the northeast prepares for the next round. tim mulholland of china-america capital joins us now following earnings from aig and hewlett- packard. what kind of cues will that give to traders today? > > you know, i think as far as beating estimates goes, and surprise, this certainly served as a good undertone yesterday when the market closed, so perhaps a little positive. both what the market is looking at right now is perhaps the onset of what some think is a long
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overdue correction, or a pause in this bull run. > what about the big drop in oil we saw this week? what do you make of that? > > oil has rallied a lot. it has backed off, as all commodities did. the mere mention of the fed removing the punch bowl, or should i say keg- [angie laughs -causes reverberations across the globe. you saw it in asia, you saw it in commodities, you even saw stock start to really take pause and note of that. so really, we know what is really driving behind this market. so, that is number one. secondly, the sequestration process and debt ceiling is upon us again, as well as, let's not forget, italian elections later this month, which could have some impact on europe and maybe could be a little eventful as far as things go over there, which could impact u.s. markets as well. > what do you view as money- makers in this market? > > it is almost like anything you touched here in this rally's been ok, but i more favor stocks that supply the infrastructure, such as some
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industrials, materials, perhaps shying away from overvalued sectors like utilities and telecoms. i still like perhaps some of the minors, and some of these mlp and pipeline plays or energy infrastructure plays as well. so there are ways, there's places to go in the market here. but i do think the rising tide lifted all boats, so as the market corrects, the boats will sink together as well. i'm not calling an end of the market, but a correction, and i think that's when you need to get your list out and make additional purchases if you need to get more invested and so forth. but we haven't had a 10% correction in over a year. so people are on the lookout for at least the onset of a pause or maybe some slight correction here. > thank you tim. > > sure. in our cover story, the obama adminsitration turns cyber sleuth, trying to catch thieves - which could include foreign interests - from stealing vital information over the internet. from public utilities to private companies, the president
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is taking steps to protect all of it from cyber thieves. "we cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy." the push for cyber security coincides with a report from computer security firm mandiant saying it exposed china's military directing cyber espionage of u.s. companies. the report said the chinese stole technology blueprints, proprietary manufacturing processes, partnership agreements, contact lists and more. "businesses need to be both aware of cyber security problems and to be proactive in adopting best practices to protect themselves and our economy." "their designs are taken. they may find them sold to chinese companies who eat into the market share of that company. overall, the u.s. economy can be hurt." the response from the white house: a series of executive orders to pursue, prosecute and punish the offenders, and a call for the private sector to share information - that last point a
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difficult one for companies trying to keep competitive advantage over one another. "they could be sued by business partners, employees and others if their proprietary information is shared under the guise of solving cyber security problems." some think consolidation of information would make matters worse. "i think it's a really bad idea. once you connect these companies, they can be attacked collectively, thereby making it easier to conduct a nationwide attack as compared with attacking them company-by- company." china's defense ministry issued a strong rebuttal, saying that china had been the victim of cyber attacks and that military terminals connected to the internet have been subject to a large number of attacks from abroad.
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united airlines is reportedly taking its dreamliners out of commission through june 5th, with one expeception. the 787 is still set to fly between denver and toyko may 12th. today, the faa will get a look at boeing's plan to get all dreamliners back in the sky. a senior boeing executvie will meet with the top official of the faa. reports say boeing is proposing a number of fixes for the grounded aircraft including: a better box to contain possible fire in the jet's lithium-ion batteries and increased space between cells in the batteries. homeowners are getting payback from big banks. total, banks have paid $45 billion as part of a settlement to help homeowners still struggling from the housing market collapse. 550,000 consumers have received assistance. jpmorgan, bank of america, wells fargo, citigroup and ally financial contributed to the settlement. 11 million consumers are underwater on their homes. it's estimated the settlement will help 1 million get back on track.
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walmart sales are off to a weak start this year. profits ticked up in the fourth quarter, but sales at walmart and sam's club were down during the holidays and into februry. walmart blames the weakness on the payroll tax hike and delayed tax refunds. the retailer expects business will pick up as tax refund checks are mailed out. gas prices and increased competition among discount retailers are also taking a toll. "i'm also concerned about all the industry growth in the discount format channel, because the dollar stores continue to open a lot of stores. and target, for example, said they're going to start matching prices for the first time." that was morningstar analyst michael keara. walmart shares closed up $1.05 at $70.26 on thursday. we're still a fast food nation, but studies show we are hitting the drive-thru less for pizza, fries, burgers and subs. u.s. adults consumed 11.8% of daily
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calories from fast food between 2007 to 2010. that's down from 12.8% between '03 to '06, according to the center for disease control. meanwhile, research finds a 'steady increase' in sales at fast casual chains, which tend to be a bit pricer but also more nutritious. meanwhile, fast food chains are heading to russia for expansion. mcdonald's announced this week it will open 150 more franchises throughout russia over the next few years. subway, burger king and yum! brands are among the other names that are setting up shop in the growing market. former executives of peanut corporation of america are indicted for the 2009 salmonella outbreak. four officials are charged with fraud, conspiracy and offering tainted peanut products to consumers. the outbreak shut down the company and forced it into bankruptcy. peanut corporation supplied peanuts to schools, nursing homes, and food processing companies. a new study shows something's
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fishy in the food industry. after testing dozens of samples of seafood in 21 states, non- profit group oceana discovered one third of fish purchased in restaurants, supermarkets and sushi counters was mislabled, including 87% of snapper samples and 59% of white tuna. mistakes or misrepresentations were commonly made on grouper, halibut, cod and chilean sea bass. it's not clear if mislabeling was done by suppliers, distributors or retailers. just 7 days are left until massive cuts in federal spending kick in, and children could be hit especially hard. recent findings show in 2011, 41% of federal money went to programs for the elderly, while a scant 10% was spent on aiding children. if sequester takes effect next month, nearly 70,000 children will be cut from head start, and nutrition programs will end for 600,000 women and young children. some members of the gop believe the sequester is the best way to
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reduce government spending. the ford motor company predicts there's a big future for turbo- charged cars. the automaker is out with plans to build a 2- liter turbo-charged engine at a factory just outside of cleveland, creating nearly 500 jobs. ford currently imports the motors from a factory in spain. the car company is fast- tracking production of the small turbo engines due to unexpected demand. the lego company isn't kidding around when it comes to re- building its business. lego is combining nostalgia and hollywood themes to sell its building blocks. since 2007, revenues have tripled. lego is now adding jobs and gaining traction against the world's number one toy company, mattel. still to come, wage war on the trading floor: the minimum wage is in focus later in traders unplugged. but first, are great jobs in tech slipping through the
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fingers of americans? that and more next with bill moller.
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we've talked before on first business about the lack of computer literacy skills in america. the unemployment rate for technology jobs is a measly 3.3%. to find qualified i.t. candidates, a lot of companies have to go hunting across asia for prospects who come here on
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work visas. let's talk with robert howden, he's a campus manager at computer systems institute. robert, you almost wish it wasn't so easy for companies to go overseas and find ready-made candidates. > > absolutely. of course, they have a bit of an advantage because they have basically invested in this infrastructure to build great candidates. they have great i.t. education programs in places like india, and they invest a lot in those programs. so then they get a job over there, get experience, and then they say, "hey, there are high-paying jobs in the united states, i am going to get a sponsorship," and they come over and they go ahead and get a high-paying job here. > they also have infrastructure over there, because that's where all the call centers are, the support systems. > > exactly. we have built this outsourcing industry, and we think of outsourcing as being these kind of low-paying jobs like answering the phone for billing problems and stuff. but they need to build this infrastructure, they need to build call centers, they have people running them, building the computers, putting things together. those are great-
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paying jobs and they give them experience. > you were telling me that the american academic institutions are catching up. > > it is true. we have started to emphasize technical education, like at large public school systems, teaching the a+ certification, which is a great entry-level certification into i.t. as a field. get our students started earlier. companies like computer systems institute, we put together a quick program to get people on their feet and out into the workforce with the skills they need to gain that experience. > it is still going to take a few years though to catch up to the rest of the world. > > that's true, but we are working on it, and when our candidates get out there and get the experience, they will get the hihg-paying jobs as well. > beyond the skill that so many young people have doing video games and knowing their way around a pc or an imac, how might a parent know whether or not their child has aptitude for this type of technology that might one day turn into a high- paying career? > > traditionally we think of math as being the litmus test, but really problem-solving skills, wanting to do things on their own and solve issues - think of like a child playing with a set of legos and deciding what they can do with the pieces that they have and how they can make what they want to make, those really go-getter, problem-solving skills are what i look for. > do you have it yourself,
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robert? > > of course. > you were a lego player? > > i was a lego player. and i also like to make things work. > robert howden from computer systems institute. thanks so much. > > thank you. just ahead, a productive session of traders unplugged is coming up next. the guys debate herbalife, gold, and lazy workdays. stay with us.
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time now for traders unplugged, starring two pro traders from the floor of cme group, alan knuckman and andrew keene. we're giving top billing to herbalife today. carl icahn uses options on this stock. what is the best strategy? > > the best strategy is wait until it dips to around $35 and then get long. i'm going to get long for the longer-term part of january, 2014 position. icahn has much deeper pockets ackman. his net worth is about 20 times as much, so he can literally bury the guy if he wants. > > if you can ignore the noise and just look at the charts, we have seen a major recovery from the bottom- > > charts... > > -and it has gone straight down on all these rumors and innuendoes. so, i think it looks bullish, and i like the may 26 call, a carl icahn play here. a 26 call for may. the break-even is $1 higher. and if it breaks above $38 once again we could get a quick run-up to the $48 level. > round two: the data shows that americans like to work. but are we too productive? > > too productive? > yeah, you heard me.
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> > 2/3 of the united states population is overweight or obese, so i don't think we're too productive- > > what does that have to do with productivity? > > compared to china, i think apple is going to show us how unproductive we are when they are moving all their- > > i have to interject. if wages had kept up with productivity, wages would be about six times higher. the minimum wage would be above $20, and the household income would be $90,000. so, the productivity is increasing profits- > > if you think we work harder than other countries, absolutely not- > > productivity has dramatically increased. > > americans are lazy. > > if the middle wage goes up $1, that increase is $2800 in the pockets of minimum wage workers. > round three. let's move on and talk about reflation nation - or should we even be worrying about inflation? > > here is the thing: there are about 10,000 economists that will tell you there's inflation around the world with commodity prices. but here is alan knuckman saying no. > > cpi 1.6% higher year-over-
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year. let's look at gold. gold right now is $200 lower than it was a year ago at this time. crude is trading now- > > what does gold have to do with anything? > > -dramatically lower. > > that's like using diamonds. > > if you are using those as a gauge- > > it's a currency, it's not a commodity. > > is at its year lows. > > there is no industrial production. gold is not a commodity, that's currency. > > global inflation is essentially zero. even nigeria, which has had triple-digit inflation, has crawled back now into single digits. inflation is not the problem, deflation is the concern. > i am glad you are talking about gold, because the oscars are coming up, and i have an oscar trivia question for you. > > oh, i don't like this. > > oh no... > how much is an oscar statue worth? and i will give you one clue: it is gold-plated pewter. > > pewter? we don't trade the pewter market. i think that is- > all right, how about this? is it $100? > > no way, higher. > $500? > > more. > -or $1,000? > > i would say $1,000. > > $500. i will go with the middle. > $500. alan, you win. ding ding ding. good job. > > first time. first time for everything. > we will be back right after
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we have a plethora of topics to get to with trader tim biggam. he joins us now for a look at the charts. good morning to you. let's start with coca-cola. the company is raising its dividend by 10%. i know this is a stock that you have liked in your portfolio. would you buy more at these levels? > > absolutely. i think stocks like coca-cola that have a yield approaching the 30-year treasury and combine that with some pretty good and solid revenue and earnings growth, lower beta names, so a place to maybe hunker down short-term in market turmoil. i like just adding these on weakness. we have seen some weakness recently in coke shares, so i would absolutely be a buyer, and would continue to be a buyer on dips going forward in coca-cola and similar names. > what about the overall market? you tend to be more bearish than bullish. where do you
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stand? > > right here, given the pullback we have finally seen over the past couple days here, it has come down a little bit. i still think we have a little bit further to go, probably below that 1500 level on the s&p, 1475 to 1450 is probably an area i would be interested in adding some positions here. so, i think the market got ahead of itself given the fact we were up seven weeks in a row and up almost 8% on the year in less than two months. got a little frothy. i think going forward will be a grind here, and names like coca-cola, that throw off almost 3% now in yield, will help to buffer through what may be a difficult market over the next couple months. > we have been watching the pullback in gold, and i know that you trade gld. what is the
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trade there, or is it a buy- and-hold? > > i think gold, given it finally had its comeuppance so to speak, breaking sharply through some support at that 1600 level on gold itself and 150 level on gld. but, i think anyone who doesn't have that in their portfolio, this would be an attractive level, certainly, to be adding to it. i think everyone should probably have a little exposure to gold as a portfolio kind of basis, and certainly gold hasn't been at this level over the past several years. > thanks tim. have a nice weekend. > > you too. thank you angie. it's closing time for first business for today. coming up next week, critical information on saving for retirement. what you need to know about the new rules on roth iras. from all of us here, have a great friday.
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